The hydrogen industry still waits for the Biden Administration to loosen restrictive 45V tax credit rules. Now, after about seven months, it’s safe to say industry executives and even a few U.S. Senators are losing patience. Still, even as we wait, now is a great time to invest in some of the best hydrogen stocks on weakness.
We all know that when loosened, the Biden Administration could get one step closer to cutting emissions, as hoped. Hydrogen — which only produces water vapor and warm air—is key to helping the U.S. achieve its net-zero emission goals.
While most industries wait for the rules to change, companies like Plug Power (NASDAQ:PLUG) claim tax credits anyway. Plus, even though the 45V tax rules have yet to be finalized, the company is pushing forward anyway, with CEO Andy Marsh confident the rules will change.
In addition, Plug Power once noted the current restrictive rules: “The burdens imposed by this trio of restrictions will drastically stunt the growth of the clean hydrogen industry and prevent many promising projects from ever getting off the ground,” as quoted by HydrogenInsight.com.
With hopes that 45V will soon change, it’s time to buy some of the best hydrogen stocks.
Linde (LIN)
When I first highlighted the opportunity in Linde (NASDAQ:LIN), I said, “With patience, I’d like to see it refill its other gap at $460. Plus, we can collect its yield as we wait for LIN to tick higher.”
That was on May 20, as LIN traded at about $430. While it hasn’t hit my target of $460 just yet, it hit a high of $446.48 before pulling back to $425, which is still a strong buy. At $425 support, not only can we pick up the LIN stock on the cheap, but we can also collect its yield of about 1.3% while waiting on its recovery.
Helping analysts at Mizuho raised their price target on LIN to $512 with a buy rating. As noted by Investorplace contributor Terel Miles, “Linde’s established presence and technological capabilities will drive approximately 8-10% EPS growth in FY24. This makes LIN stock one of the top renewable energy stocks to snap up before the next leg higher.”
Air Products and Chemicals (APD)
Weakness is also an opportunity for Air Products and Chemicals (NYSE:APD).
The oversold giant caught strong support after plunging from about $285 to $246. It’s even oversold on RSI, MACD and Williams’ %R, which tells us the pullback is greatly overdone. Better, the last time APD became this technically oversold, it bounced from about $226 to $285. A buy opportunity again now, I’d like to see APD initially retest $285 near term.
Plus, while we wait for the recovery, we can collect its $1.77 dividend, payable Aug. 12 to shareholders of record as of July 1, which gives it a current yield of 2.82%. Even better, many analysts just raised their price targets on APD.
Bank of America analysts just raised their price target to $312. Deutsche Bank raised its price target to $310. Even BMO Capital raised its price target on APD to $263 from $250, with an outperform rating.
BMO added, “With continued pricing, a more aggressive focus on cost-cutting, no major changes on the projects, and the corp. line likely to improve with the help of greater LNG equipment, we believe the stock will start to grind higher,” as quoted by Investing.com.
Global X Hydrogen ETF (HYDR)
Or, we can buy the dip and diversify with some of the best hydrogen stocks with the Global X Hydrogen ETF (NASDAQ:HYDR).
With an expense ratio of 0.5%, the ETF invests in stocks involved in hydrogen production, hydrogen fuel cell development and manufacturing. Some of its top holdings include Bloom Energy, Plug Power, Ballard Power (NASDAQ:BLDP), ITM Power (OTCMKTS:ITMPF) and Ceres Power (OTCMKTS:CPWHF).
Over the last few weeks, the HYDR ETF dropped from about $34 to $25.60, which is where investors should buy on weakness. Helping, the ETF has also become oversold on RSI, MACD and Williams’ %R here. From its last traded price of $25.60, I’d like to see a retest of $30.
On the date of publication, Ian Cooper did not have (either directly or indirectly) any positions in the securities mentioned. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
